A nationwide electricity-price increase is looming in China as many plants are suffering significant losses, while previous concerns about a rate hike that would hurt China's efforts to control prices have abated due to the latest inflation data.

A source said Monday that a proposal to raise electricity rates has recently been submitted to the central authority.

"It's highly probable the proposal will be passed if October's consumer price index showed a clear downward trend," the source said.

China's consumer price index, a main gauge of inflation, rose 5.5 percent in October, the slowest in five months, although it still exceeded the government's full-year target of 4 percent.

Analysts had worried that increasing power tariffs could jeopardize the country's efforts to put runaway inflation under control, which was set as the top economic priority by the central government earlier this year.

Now that this concern has eased, China's power companies are hoping the rate hike can be approved to help cover their whopping losses to an extent.

A rough calculation reveals that a rise of 0.01 yuan per kilowatt-hour in on-grid power tariff can cover power plants' costs from a 25 yuan per tonne rise in the coal price.

Data shows the nation's five largest power generation companies, including Huaneng, Huadian and Datang, reported combined losses of 7.46 billion yuan (1.18 billion U.S. dollars) in their electricity generation businesses during the first seven months of the year.

A majority of thermal power plants in central and northeastern China are suffering losses, and the losses have been expanding throughout the year, according to a report released by the China Electricity Council (CEC), which cited the rising price of coal as a major reason for those companies' losses.

By Nov. 9, the average price of thermal coal remained at a historic high of 853 yuan per metric ton for three consecutive weeks, according to the Bohai Rim Steam Coal Price Index, China's government-run coal price gauge.

The continuing rises in coal prices and the supply shortage will make the situation even worse as coal is China's cornerstone of power generation, analysts said. About four-fifths of China's electricity comes from thermal power plants.

Tan Rongyao, chief supervisor of the State Electricity Regulatory Commission (SERC), forecast last month that China may have a power shortage of about 26 million kilowatts.

However, analysts with the CEC were even more pessimistic on the matter, projecting the gap between electricity demand and supply in the same period will be around 30 million to 40 million kilowatts.

Power shortages have been a persistent headache for China. In 2008, many southern provinces were hit by the worst power crunch in five years, with these regions' power-generating capacities going under-utilized due to the coal shortage and soaring prices.

To make things worse, stricter emission standards for thermal power plants will take effect on Jan. 1, 2012.

The CEC said the new standard will raise the costs of thermal plants by 90 billion to 110 billion yuan.

Subsequently, power companies that are already suffering sizeable losses will struggle to endure the new standard.

As the world's largest coal consumer, China consumed 2.28 billion tonnes of coal in the first nine months this year, up 10.3 percent year-on-year.

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